Construction and engineering major L&T posted an 11.8% yearly sales growth for the quarter ended December 2013. Recurring profit grew 12.1% to Rs. 1136.3 crore. Order inflows grew 21% to Rs. 21722 crore and order book grew 13% to Rs. 171184 crore. Margins expanded 180 bps to 11.6% but management said margins vary quarterly. Results were good despite slowdown but near-term earnings growth is seen as muted. Electrical equipment maker V-Guard reported a 1.1% yearly sales growth for the quarter ended December 2013. EBITDA margins improved 89 bps to 8.2% on lower

1. IEA-Equity
Strategy
India Equity Analytics
24th Jan, 2014
Daily Fundamental Report on Indian Equities
Larsen & Toubro Ltd: "On Track of Revival………"
"NEUTRAL"
Edition : 191
24th Jan 2014
As per the management, the quarterly margins differ for every quarter as the project completion cycle is different and hence it is difficult to
capture the EBITDA movement every quarter. Though we agree with the management’s comment, we still believe that there would be some
amount of pressure on the margins on a yearly basis due to risks related to competition, inflation, adverse mix and a slowdown. As regards the
results we are of the opinion that, despite the gloomy scenario the results have been good. Consistent order inflow is a major positive factor.
We expect the sector to witness revival in coming quarters, whereas we see a near term earnings growth muted and look for a better entry
point. Currently we have a neutral view on a stock ......................... ( Page :2)
V-Guard: "Lower FY14 Sales growth guidence to 11-12%"
"HOLD"
24th Jan 2014
We believe that during the election period, the power supply could remain better (with political interest), consequently lowering the UPS
demand. Hence, it could take a couple of quarters to witness a reversal in the trend, if any. On this backdrop, we have lowered our revenues
estimates by 9% in FY2014 and 13% in FY2015. Consequently, we have revised down our EPS estimates by 21% in FY2014 and 16% in FY2015
......................................................... ( Page : 3-5)
Dabur India Ltd : "Confident tone for growth"
"BUY"
24th Jan 2014
Dabur delivered inline set of numbers;During 3QFY14, Dabur reported 16.7% (YoY) sales growth led by 9% overall volume growth because of
discretionary demand ramp up in rural area and price hikes by around 4-5% . PAT grew by 16%(YoY).Post earning, company’s management
stated that they would focus on pursuing aggressive and profitable growth strategy with brand building by judicious mix of price hike and
product launch in near future. ............................................( Page :6-8)
Ultratech Cement : Moderated but Not outdated
"HOLD"
24th Jan 2014
Ultratech's Q3FY14 was in line to our estimates.The white cement Volume Growth and capacity expansions are positive in terms of
fundamentals. We see the uptick of EBIDTA margin and volume growth for FY15. Currently the stock valuing at 3x in 1yr forward P/B, and we cut
our stance for FY15 to 2.7x. Hence we maintain our positive stance on Ultratech Cement with Target price of Rs.1846/- . As from the current
level the upside is very limited(7%), we recommend “Hold” Ultratech and Buy at Dips to get handsome return.
............................................................ ( Page : 9-11)
Public Sector Banks Result Preview 3QFY14E
24th Jan 2014
Most of PSBs are trading at lower range of valuation multiple owing to absence of core earnings, operating leverage, deteriorating asset quality
and higher amount of restructure assets that are in pipeline. High inflation would be risk for the economy going forward. Any rise in inflation
would result of rise in interest rate by RBI in its third quarter monetary policy review on 28th Jan.2014 which would be negative for banking
industry. Most of banking stocks are expected to report moderate revenue and profit growth owing to multiple headwinds. In PSBs universe we
like Canara Bank, UCO Bank, Union Bank. .............................................. ( Page : 12-15)
HDFC LTD :
"NEUTRAL"
23th Jan 2014
HDFC profit growth of 12.1% YoY was inline with street expectation. NBFC reported stable asset quality on sequential basis as well as registered
healthy loan growth. HDFC ltd has well above CAR which would support growth going forward. At the current price of Rs.840, stock is trading at
4.3 tines one year forward book and 26 times of FY14E’s earnings. We value HDFC at Rs.875/ share which is 4.5 times of FY14E’s book and P/E
multiple of 27 times of full year EPS. .......................................................... ( Page : 16-18)
Zensar Tech : "Better growth trajectory ahead"
"BUY"
23th Jan 2014
Earning numbers below expectation, management confident for growth ahead:For 3QFY14, Zensar Tech reported lower growth than
expectations, Sales declined by 1%(QoQ) because of seasonal and furloughs impacts.Considering healthy order pipeline and its earning visibility
in near future, we maintain “BUY” view on the stock with a target price of Rs 440. At a CMP of Rs 386, stock trades at 5.6x FY15E EPS
................................................................... ( Page : 19-21)
Narnolia Securities Ltd,

2. Larsen & Toubro Ltd.
V-
"Neutral"
24th Jan' 14
"On Track of Revival………"
Result update
Neutral
CMP
Target Price
Previous
Target Price
Upside
Change from
Previous
1033
NA
NA
NA
NA
Market Data
BSE Code
NSE Symbol
52wk Range
H/L Capital
Mkt
(Rs Crores)
Average Daily
Volume
Nifty
500510
LT
861/114
6
80,145
95,662
6,346
Stock Performance-%
Absolute
Rel. to Nifty
1M
(2.7)
1.1
1yr
0.8
4.6
YTD
13.5
11.6
Share Holding Pattern-%
Promoters
FII
DII
Others
3QFY14
0.0
17.9
36.6
45.5
2QFY14 1QFY14
0.0
0.0
15.3
16.1
37.4
36.9
47.4
47.2
Price Performance V/s NIFTY
Construction & engineering major, L&T posted a surprisingly set of numbers for the quarter
ended Dec, 13. The company's net sales grew by a mere 11.8% on a yearly basis to Rs
14387.5crore. The company recurring bottom line witnessing a upstik of 12.15% , and came in
at Rs. 1136.3 crore. the results have been adjusted for the quarter as it transferred
hydrocarbon business to its subsidiary L&T Hydrocarbon Engineering with effect from April 1,
2013. Accordingly, the company restated suitably its earnings for the previous quarter ended
September 2013 and numbers relating to previous periods. However, if we If we consider the
exceptional gains on dilution of part stake in a subsidiary company, the overall PAT grew by
22.1 % during the quarter. While the operational performance has been good, the company
has witnessed good traction in its order book also. Order inflow for the quarter stood at Rs
21722 crore showing a growth of 21% on Y-o-Y basis. The total order book as on December
31st 2013 stood at Rs 171184 crore showing an increase of 13 % on Y-o-Y basis. EBITDA
margins for the Dec 2013 quarter expanded by 180 bps to 11.6% against 9.8% last year.
However, as per the management, the quarterly margins differ for every quarter as the project
completion cycle is different and hence it is difficult to capture the EBITDA movement every
quarter. Though we agree with the management’s comment, we still believe that there would
be some amount of pressure on the margins on a yearly basis due to risks related to
competition, inflation, adverse mix and a slowdown. As regards the results we are of the
opinion that, despite the gloomy scenario the results have been good. Consistent order inflow
is a major positive factor. We expect the sector to witness revival in coming quarters, whereas
we see a near term earnings growth muted and look for a better entry point. Currently we
Why neutral…???
Contribution margin expansion came as a surprise and in our recent meeting the management
attributed it to quarterly skews rather than improvement in project-level profitability. We build
slightly higher margins for FY2014E at 10.9% (versus 10% earlier). However, we believe margins
face downward trajectory over FY2014-16E (build EBITDA margin of 10.5% in FY2015E and 10.3%
in FY2016E) due to risks related to competition, inflation, adverse mix and a slowdown. L&T
maintained its revenue growth guidance of 15% yoy for FY2014 (9% posted in 9MFY14). We build
lower revenue growth of 12% in FY2014 implying 16% growth requirement in 4QFY14. L&T also
maintained its inflow guidance of 15-20% in FY2014 (strong 23% growth in 9MFY14; but is a bit
wary about maintaining this traction on delayed decision making by customers).
Outlook
We have a Neutral on L&T as we think it will be difficult rate L&T from today’s level without
earnings upgrade and/or uncertanity across sector. Downside risks are project delays, weaker
margins and stronger Rupee. Upside risks are higher than expected order inflow and higher
operating margins a head.
Financials
Revenue
EBITDA
PAT
EBITDA Margin
PAT Margin
3QFY14
14387.5
1674.8
1240.7
11.6%
8.4%
2QFY14
12308.4
1185.7
864.6
9.6%
6.8%
(Source: Company/ Eastwind Research)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
(QoQ)-%
16.9%
41.3%
43.5%
200 bps
160 bps
3QFY13
12869.3
1258.3
1013.2
9.8%
7.5%
Rs, Crore
(YoY)-%
11.8%
33.1%
22.4%
180 bps
90 bps
(Standalone)
2

3. V-Guard Industries Ltd.
V-
"Hold"
24th Jan' 14
"Lower FY14 Sales growth guidence to 11-12%……..."
Result update
Hold
CMP
Target Price
Previous
Target Price
Upside
450
475
525
5%
-11%
Change from
Previous
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Crores)
Average Daily Volume
Nifty
532953
V-GUARD
390/570
1,374
59,460
6,344
Stock Performance-%
Absolute
Rel. to Nifty
1M
(4.5)
(5.6)
1yr
(9.0)
(13.6)
YTD
5.0
(6.7)
2QFY14
65.5
17.4
2.5
14.5
1QFY14
65.5
14.5
3.5
16.4
For the quarter ended Dec 2013, V-Guard reported a top line of Rs. 352.9 crore, compared to
Rs. 349.0 crore in 3QFY13, marking a marginal YoY growth of 1.1%. EBITDA margins for the
quarter were significantly improved to 8.2% (up 89 bps YoY) due to lower ad spends. Interest
expense for the quarter were up by 10.0% YoY to Rs. 5.4 crore and after giving effect
depreciation and taxes, the company’s PAT stood at Rs. 17.5 crore (up 14.2% YoY). On
conference call, the management of V-Guard lowered their top-line guidance to 11-12% from
the earlier 18-20% in FY2014. However, they expect to achieve EBITDA margin of around 8.5%
for FY2014. We believe that during the election period, the power supply could remain better
(with political interest), consequently lowering the UPS demand. Hence, it could take a couple
of quarters to witness a reversal in the trend, if any. On this backdrop, we have lowered our
revenues estimates by 9% in FY2014 and 13% in FY2015. Consequently, we have revised down
our EPS estimates by 21% in FY2014 and 16% in FY2015.
Strong Balance Sheet
•Total Debt has been reduced significantly as on 3Q FY14 to Rs. 117.7 crore, compared to Rs. 157
crore as on 3Q FY13. Working capital loan reduced to Rs. 77.1 vrore from 134.0 crore and
whereas term loan icreased to Rs. 40.6 crore from 22.9 crore.
• Working capital cycle on a TTM basis improves by 9 days to 76 days. Mainly Led by 15 days
reduction in debtors. Management has also guided for improvement in net working capital cycle
by 5- 10 days every year going forward. This will further improve its ROCE and ROE going
forward.
• Strong cash generation in 9M. FY14 Cash from operations at Rs. 90 crore in 9M FY14 as
compared to Rs. 14.5 crore for full year FY13
Share Holding Pattern-%
Promoters
FII
DII
Others
3QFY14
65.5
18.5
2.2
13.8
1 yr Forward P/B
Outlook
As expected, the company’s contribution to revenue has improved from its non south market as
compared to its incumbent southern market. All in all we observe this result as significantly
below our estimates. Although company has reported increase in EBITDA margin in 3QFY14 by 80
bps, but it still below our full year expectaion of 9%. We believe that during the election period,
the power supply could remain better (with political interest), consequently lowering the UPS
demand. Hence, it could take a couple of quarters to witness a reversal in the trend, if any. On
this backdrop, we have lowered our revenues estimates by 9% in FY2014 and 13% in FY2015.
Consequently, we have revised down our EPS estimates by 21% in FY2014 and 16% in FY2015.
However we belive company strong balance sheet, a wide range of products and a strong hold
over its existing market, all of which give it an edge over its rivals. At the current CMP of Rs.
457, the stock is trading at a PE of 18.3x and 13.8x of FY14E and FY15E. The company can post
RoE of 23.2% and 24.1% & EPS of Rs. 25.2 and Rs. 33.2 FY14E and FY15E. We belive that the
current level is not attractive to make position in this stock, one should wait further correction
from current level, however one who already own the stock can hold it with the revised price
target of Rs. 475.
Financials
Consolidated
Revenue
EBITDA
PAT
EBITDA Margin
PAT Margin
3QFY14
352.9
29.1
17.5
8.1%
4.9%
2QFY14
334.0
27.1
14.5
8.1%
4.3%
(Source: Company/ Eastwind Research)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
(QoQ)-%
5.7%
7.7%
-21.0%
0 bps
60 bps
3QFY13
349.0
25.7
15.4
7.3%
4.4%
Rs, Crore
(YoY)-%
1.1%
13.3%
14.2%
80 bps
50 bps
Standalone
3

4. V-Guard Industries Ltd.
Confrence Call Highlights
• Non South market sales in Q3 FY'14 stood about 30% of total sales and grew by about 30% as
well. The South market which constitutes about 70% degrew by about 8-9% in value terms and by
about 13-15% in volume terms. Overall, thus company ended up with flattish kind of sales growth
in Q3 FY'14. For Q4 FY'14, management expects about 10-12% sales growth.
• In Q3 FY'14, the company was able to improve its gross margin by 100 bps which was largely due
to lower Advertisement expenditure YoY. Going forward Ad expenditure will be around 3.5-4% of
sales.
• The Electronics segment, which constitute stabilizers and UPS, which contribute about 24% of
total sales in Q3 FY'14, degrew by 18% YoY, Electrical which includes pumps, house wiring cable,
electric water heater, fans and others, and contribute about 72% of total sales, grew by about 8%,
with electric water heater and house wiring cables delivered a healthy growth, while the solar
water heater which constitute about 4% of total sales, grew by about 30%. The premium variant of
the electric water heater segment launched in FY'14 continues to get good response.
• As per the management, better power supply in States of Tamil Nadu and Andhra Pradesh
together with lower sale of consumer durable products due to weak consumer sentiment, affected
the growth of the company. Also due to sand mining ban in many parts of the country,
construction activities were also slow leading to lower sale of wire business.
• As per the management, the power situation in South India should be temporary phenomena
largely due to elections. Also extended monsoon also delayed some of the product sale and
affected the demand.
• Total market of electric wires will be about Rs 7500 crore of which company has share of about
6%. By year end the company should be able to report about Rs 450-475 crore of electric wires.
Polycab has highest market share of 20% followed by Finolex cables of about 12%.
• Raw material prices of cooper and other metals were steady and more on downward side.
Management expects raw material prices to slightly inch up from March'14 onwards which is
general seasonally trend.
• The new products introduced last year namely Induction Cooker, Mixer Grinder and Switchgears
did well and are expected to post revenue of about Rs 50 crore totally in FY'14.
• Lower tax rate during the quarter was as a result of a 200% weightage deduction on R&D and on
capital expenditure which the company received the approval from this year and going forward
also the deduction will continue.
• Overall, management expects about 11-12% growth in FY'14 with Ebidta margin of about 8.5-9%.
The management lowered its earlier guidance of about 20% growth in FY'14 largely due to current
economic and environmental challenges.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
4

5. V-Guard Industries Ltd.
Key financials
PARTICULAR
2010A
2011A
2012A
2013A
2014E
2015E
454
1
456
50
43
7
5
40
14
NA
25
10
3.5
8.5
727
2
728
73
65
8
11
55
16
NA
39
12
4.1
13.1
994
2
996
94
84
10
17
69
18
NA
51
12
4.1
17.0
1360
4
1364
110
99
11
20
82
19
NA
63
12
4.1
21.1
1510
5
1515
131
119
12
21
102
27
NA
75
12
4.1
25.2
1736
6
1742
156
141
15
15
132
33
NA
99
12
4.0
33.2
11.1%
5.6%
9.6%
4.0%
18.0%
13.8%
10.1%
5.4%
7.8%
2.4%
22.7%
16.2%
9.4%
5.1%
9.2%
2.2%
24.1%
21.2%
8.1%
4.6%
4.8%
0.9%
24.1%
19.4%
8.7%
5.0%
5.5%
0.9%
23.2%
21.4%
9.0%
5.7%
7.2%
0.9%
24.1%
21.7%
141
81
222
3
89
172
139
311
3
168
211
109
320
3
186
261
165
427
3
435
324
125
449
3
460
412
115
527
3
460
47.4
1.9
8.4
10.4
57.6
2.9
5.7
12.9
70.6
2.6
4.9
10.9
87.6
5.0
4.9
20.7
108.7
4.2
5.6
18.3
137.9
3.3
9.4
13.8
Performance
Revenue
Other Income
Total Income
EBITDA
EBIT
DEPRICIATION
INTREST COST
PBT
TAX
Extra Oridiniary Items
Reported PAT
Dividend (INR)
DPS
EPS
Yeild %
EBITDA %
NPM %
Earning Yeild %
Dividend Yeild %
ROE %
ROCE%
Position
Net Worth
Total Debt
Capital Employed
No of Share (Adj)
CMP
Valuation
Book Value
P/B
Int/Coverage
P/E
(Source: Company/ Eastwind Research)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
5

6. Dabur India Ltd.
"BUY"
24th Jan' 14
"Confident tone for growth"
Result update
CMP
Target Price
Previous Target Price
Upside
Change from Previous
BUY
162
206
27%
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Average Daily Volume
Nifty
500096
DABUR
185/125
28197
908049
6346
Stock Performance
1M
Absolute
3.3%
Rel. to Nifty
2.20%
1yr
25%
20%
YTD
24.0%
12.8%
Share Holding Pattern-%
Current
Promoters
FII
DII
Others
68.64
19.94
4.47
6.95
P/BV(x)-1year forward
2QFY14 1QFY14
68.66
20.71
3.96
6.7
68.66
20.4
3.97
7
Dabur delivered inline set of numbers ;
During 3QFY14, Dabur reported 16.7% (YoY) sales growth led by 9% overall volume
growth because of discretionary demand ramp up in rural area and price hikes by
around 4-5% . PAT grew by 16%(YoY).
The International Business grew by 26%. Organic business grew by 29% with 14%
constant currency growth rate led by strong performance in GCC, Egypt and Nigeria.
The GCC business reported a 21% growth, while sales in Egypt and Nigeria both grew
by 16%. Domestic FMCG business grew by 14%.
Post earning, company’s management stated that they would focus on pursuing
aggressive and profitable growth strategy with brand building by judicious mix of price
hike and product launch in near future.
Margin ramp down: During the quarter, EBITDA margin declined by 120 bps to 15.6%
due to rise in A&P cost by 130 bps to 15.72% and employee cost by 60 bps to 8.58% of
adjusted net sales. PAT margin flat at 12.8% on YoY basis.
Volume growth in single digit: Because better discretionary demand environment in
rural area and judicious pricing strategy overall volume growth increased by 9% (YoY) in
3QFY14 with 4-5% (YoY) pricing growth.For FY15E, management stated to hike its
product prices by 4-5% to maintain its margin.
Growth on all Categories: The Health Supplements business was a key driver of growth
during the quarter, reporting a strong 19.5% surge. The Air Freshener business under
the brand Odonil, continued to surge ahead with an over 27% growth. The Foods
business also reported a robust near 18% growth. The Shampoo business grew by 25%.
The Toothpaste business grew by over 14% while the Skin Care category reported an
over 13% growth.
Recent updates: (a)Introduced a host of new products and variants, including the new
Fem Fairness Naturals facial bleach range and Vatika Hibiscus hair care range.(b)Dabur
Tunisie, a wholly owned subsidiary, incorporated in Tunisia on Dec. 2013 with the object
of buying, selling and manufacturing consumer care products, having meagre asset base
at present.
View and Valuation: Despite signs of weak discretionary demand and increased
competitive intensity in the market, Dabur India has reported comparatively better
volume growth in its key categories. On all operating parameters, its performance was
satisfactory. Still, management is cautious for margin ramp up due to high inflation in
India.
The strong momentum in relatively low competition in the core categories with
diversified portfolio, Dabur gets a better place than other peers and its rural
distribution expansion should boost sales volumes. We retain our “Buy” view on the
stock with a target price of Rs206. At a CMP of Rs 162 stock trades at 8.5x FY15E P/BV.
Financials
Revenue
EBITDA
PAT
EBITDA Margin
PAT Margin
3QFY14
1904.28
297.59
243.5
15.6%
12.8%
2QFY14
1748.81
329.24
249.83
18.8%
14.3%
(QoQ)-%
8.9
(9.6)
(2.5)
220bps
150bps
3QFY13
1635.98
274.51
209.87
16.8%
12.8%
Rs, Crore
(YoY)-%
16.4
8.4
16.0
120bps
-
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
6

7. Dabur India Ltd.
Sales and Sales Growth(%) -
(Source: Company/Eastwind)
Consolidated Volume Growth-%
The company has been looking to maintain 812% volume growth in the near term.
(Source: Company/Eastwind)
Margin-%
EBITDA margin declined by 120 bps to 15.6%
due to rise in A&P cost by 130 bps to 15.72%
and employee cost by 60 bps to 8.58% of
adjusted net sales.
(Source: Company/Eastwind)
Expenses on sales-%
RM cost (on sales) decreased from 37.6% to
36.3% and AD spend down from 14.4% to
12%, historicaly low ad spend.
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
7

8. Dabur India Ltd.
Key facts from Management Commentary:
■ The company may hike prices by 4-5% in FY15E and focus will be on pursuing an
aggressive and profitable growth strategy.
■ Ad expenses to be within the range of 13-15 percent at the consolidated level for
FY15E.
■ Expanding rural distribution networks as a part of project double and new products as
hair serums and professional hair care products were launched.
■ There has been a softening of demand generally speaking in urban India. Overall much
higher level of growth is coming from rural as compared to urban.
Financials
Rs in Cr,
Sales
RM Cost
Purchases of stock-in-trade
WIP
Employee Cost
Ad Spend
Other expenses
Total expenses
EBITDA
Depreciation and Amortisation
Other Income
EBIT
Interest
PBT
Tax Exp
PAT
Growth-% (YoY)
Volume
Pricing
Sales
EBITDA
PAT
Expenses on Sales-%
RM Cost
Ad Spend
Employee Cost
Other expenses
Tax rate
Margin-%
EBITDA
EBIT
PAT
Valuation:
CMP
No of Share
NW
EPS
BVPS
RoE-%
P/BV
P/E
FY10
3391.4
811.0
750
(10)
285
493.5
438.4
2767.3
624.1
50.0
39.4
613.5
12.3
601.2
100.5
500.7
FY11
4104.5
1806.8
252
(122)
309
534.6
524.1
3304.8
799.7
95.2
32.2
736.6
29.1
707.5
139.0
568.5
FY12
5305.4
2278.8
509
(103)
387
659.5
683.1
4415.2
890.2
103.4
57.4
844.2
53.8
790.4
146.4
644.0
FY13E
6178.9
2422.1
599
(2)
471
837.0
819.10
5146.6
1032.2
112.7
92.0
1011.5
58.9
952.6
182.62
770.0
FY14E
7070.30
2757.42
742.38
(71)
608.05
996.91
908.53
5942.59
1127.71
111.09
141.41
1158.03
54.69
1103.34
212.39
890.95
FY15E
8203.32
3240.31
820.33
(41)
738.30
1132.06
1066.43
6956.42
1246.90
133.15
164.07
1277.82
51.95
1225.87
232.91
992.95
10.5%
5.0%
16.0%
10.6%
11.4%
20.9%
33.9%
28.1%
21.0%
28.1%
13.5%
29.3%
11.3%
13.3%
16.5%
16.0%
19.6%
9.5%
4.5%
14.4%
9.3%
15.7%
23.9%
14.6%
8.4%
12.9%
16.7%
44.0%
13.0%
7.5%
12.8%
19.6%
43.0%
12.4%
7.3%
12.9%
18.5%
39.2%
13.5%
7.6%
13.3%
19.2%
39.0%
14.1%
8.6%
12.9%
19.3%
39.5%
13.8%
9.0%
13.0%
19.0%
18.4%
18.1%
14.8%
19.5%
17.9%
13.9%
16.8%
15.9%
12.1%
16.7%
16.4%
12.5%
16.0%
16.4%
12.6%
15.2%
15.6%
12.1%
158.6
86.8
935.4
5.8
10.8
53.5%
14.7
27.5
96.1
174.1
1391.1
3.3
8.0
40.9%
12.0
29.4
103.2
174.2
1716.9
3.7
9.9
37.5%
10.5
27.9
131.0
174.3
2124.4
4.4
12.2
36.2%
10.7
29.7
162.0
174.3
2689.1
5.1
15.4
33.1%
10.5
31.7
162.0
174.3
3335.4
5.7
19.1
29.8%
8.5
28.4
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
8

9. Ultratech Cement.
"Hold"
24th Jan' 14
Moderated but Not outdated
Result Update
Hold
CMP
Target Price
Previous Target Price
Upside
Change from Previous
1719
1846
1846
7%
0%
Market Data
BSE Code
NSE Symbol
532538
ULTRACEMCO
52wk Range H/L
Mkt Capital (Rs Crores)
Average Daily Volume (Nos.)
Nifty
1405/2067
46885
18754
6346
Lower Realization and higher Operating Cost Impact PAT: UltraTech’s 3QFY14 Sales,
EBITDA & PAT declined 1%, 24% and 39% YoY respectively to Rs4818Cr, Rs796Cr and
Rs370Cr respectively. On QoQ basis, Sales, EBITDA & PAT rose 7%, 17% and 40%. While
EBITDA margin contracted ~499 bps YoY it expanded 149 bps QoQ to 16.5%. EBITDA per
MT at Rs788 down 24% YoY and up 10% QoQ.
At Rs.788 /Ton Average Realization Down 1% YOY : The benefit of lower coal prices (net
of rupee devaluation) and optimization of the fuel mix led to an 6.5% yoy dip in power &
fuel costs a ton. A 23.5% yoy drop in EBITDA and a 75.4% yoy rise in interest led to a
37.8% yoy fall in PAT.
Despite of Weak Realization Ultratech has delivered QOQ margin Expansion :Despite
24%,7%,8% YOY increase in Rawmaterial cost, freight cost and other expenses
respectively, Ultratech’s variable input cost increased 6%YOY and -2%QOQ . Through
better cost efficiency which has been one of the key factors resulting in UltraTech’s
results outperforming its large cap peer group over the last 4‐5 quarters. Thus We believe
UItraTech will deliver QoQ margin expansion despite marginally weak realization .
Stock Performance-%
1M
-7.3
-9.0
Absolute
Rel. to Nifty
1yr
-14.8
-19.9
YTD
-10.2
-14.3
Share Holding Pattern-%
3QFY14
Promoters
FII
DII
Others
2QFY14 1QFY14
62.0
21.0
4.6
12.4
62.0
20.7
4.8
12.6
62.0
20.7
4.6
12.7
1 yr Forward P/B
5000
Price
2x
4x
6x
8x
4500
4000
3500
1x
3x
5x
7x
3000
2500
2000
1500
1000
500
Aug-13
Feb-12
Nov-12
Aug-10
May-11
Feb-09
Nov-09
Aug-07
May-08
Feb-06
Nov-06
May-05
Aug-04
0
Source - Comapany/EastWind Research
Expansion Updates :In Jul’13 it commissioned a 3.3m-ton clinker plant in Karnataka,
adding to its earlier commissioning (Mar’13) of similar capacity in Chhattisgarh. In Oct’13
it commissioned a 1.6m-ton grinding unit in Jharsuguda, Orissa, adding to its earlier
commissioning (Mar’13) of similar capacity in Hotgi, Maharashtra. The balance five
associated grinding units will be set up in 4QFY14 and FY15.
Acquisition. During 2Q, Ultratech acquired JPA’s 4.8m-ton unit in Gujarat, lifting its
capacity to 59m tons, while ongoing expansions would further that to 70m tons by
Mar’15. The transaction, at an EV of 38bn (US$125 a ton) is expected to be completed
only by 1QFY15 given multiple approvals required.
Depreciation rose 11% yoy due to the commissioning of clinker capacity in Chhattisgarh,
Karnataka, and grinding units in Maharashtra, Gujarat and Orissa. Other income too fell,
18% yoy, leading to a further crunch in PAT.
Investment concerns :Key drivers of long-term growth would continue to be housing and
infrastructure development.Revival in cement demand would be key catalyst for the
stock performance.cement prices and demand are expected to pick-up post election.High
operating leverage, especially post commissioning of new capacities in 1QFY14, could
result in volatile earnings.Cement Makers may rise cement prices due to increase in
variable input costs.
Financials :
Q3FY14
Y-o-Y %
Q-o-Q %
Q3FY13
Q2FY13
Net Revenue
4818
-1.3
6.5
4883
4522
EBITDA
796
-24.2
17.1
1050
679
Depriciation
264
10.7
0.0
239
264
Interest Cost
90
73.6
1.9
52
89
Tax
139
-45.2
30.0
254
107
PAT
370
-38.5
41.6
601
261
(In Crs)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
9

10. Ultratech Cement.
OUTLOOK :
We are expecting Demand Growth for the rest FY14 will be 4% - 5% and for FY15 it will
be in the range of 8% - 12%.Demand already revived after the monsoon ,hence it
reported a 4% realization growth in Q3FY14.The Ultratech's expansion plans are ramp
up to become 70 mnTon cement producer in India by FY15 . Its waste heat recovery
plants and efficient fuel mix (usage of petcock for energy instead of coal) moderates the
Cost pressure, so to make Ultratech cost efficient among large cap peers. Govt
initiatives to expedite large infrastructure projects have yielded little so far and this is
putting pressure in the cement makers, especially those with debt that has become
expensive to service due to high interest rates. We expect lower other income to revive
after the settlement of volatile interest rates by Govt in coming quarters. At present
ultratech is running at 79% of its capacity utilization. The utilization level may decline
due to stabilization of supply from new capacities, owing to insufficient demand in
Domestic Market. Ultratech is planning to strengthen its logistic infrastructures and
increase its captive power plants capacity, which will help to reduce its Operational
cost.
Vew & Valuation :
Ultratech's Q3FY14 was in line to our estimates.The white cement Volume Growth and
capacity expansions are positive in terms of fundamentals. We see the uptick of EBIDTA
margin and volume growth for FY15. Currently the stock valuing at 3x in 1yr forward
P/B, and we cut our stance for FY15 to 2.7x. Hence we maintain our positive stance on
Ultratech Cement with Target price of Rs.1846/- . As from the current level the upside is
very limited(7%), we recommend “Hold” Ultratech and Buy at Dips to get handsome
return.
P/L PERFORMANCE
Net Revenue from Operation
Other Income
Total Income
Power and fuel
Freight and forwarding
Expenditure
EBITDA
Depriciation
Interest Cost
Net Tax
PAT
ROE%
FY11
13798
154
13952
3280
2881
11102
2696
813
292
384
1367
12.8
FY12
19232
371
19603
4639
3741
15039
4194
963
256
948
2403
18.7
FY13
21319
304
21623
4646
4243
16480
4839
1023
252
1179
2678
17.6
Narnolia Securities Ltd,
FY14E
20797
346
21143
4315
4461
16957
3840
1110
325
759
1982
11.7
Source - Comapany/EastWind Research
Source - Comapany/EastWind Research
Source - Comapany/EastWind Research
10

11. Ultratech Cement.
B/S PERFORMANCE
Share capital
Reserve & Surplus
Total equity
Long-term borrowings
Short-term borrowings
Long-term provisions
Trade payables
Short-term provisions
Total liabilities
Intangibles
Tangible assets
Capital work-in-progress
Long-term loans and advances
Inventories
Trade receivables
Cash and bank balances
Short-term loans and advances
Total Assets
RATIOS
P/B
EPS
Debtor to Turnover%
Creditors to Turnover%
Inventories to Turnover%
EV
P/E
EV/EBIDTA
Dividend Yield%
ROCE%
Debt/Equity
Current Ratio
Cash from Operation
Cash From Investment
Cash from Finance
FY10
124
4495
4620
857
750
32
683
133
8375
6
4953
260
146
827
210
112
219
8375
FY10
3.1
88.1
2.9
9.5
1.2
15890
13.1
7.9
0.5
15.4
0.3
2.3
1673
(843)
(740)
FY11
274
10373
10647
3295
727
113
1830
473
21630
39
12265
760
583
2094
825
190
873
21630
FY11
2.9
49.9
6.0
13.3
1.5
34903
22.7
12.9
0.5
8.2
0.4
1.5
2195
(2240)
248
FY12
274
12550
12824
4843
705
121
2207
709
24904
40
12729
1940
1544
2198
1089
214
1041
24904
FY12
3.2
87.7
5.7
11.5
1.1
46634
17.2
11.1
0.5
11.8
0.4
1.6
3482
(3050)
(353)
FY13
274
14955
15230
5169
1227
135
2338
949
29590
62
14254
3601
1066
2541
1376
185
1048
29590
FY13
3.4
97.7
6.5
11.0
1.2
57428
19.1
11.9
0.5
11.3
0.4
1.4
4122
(4407)
715
Source - Comapany/EastWind Research
Source - Comapany/EastWind Research
Narnolia Securities Ltd,
11

12. Public Sector Banks Result Preview
3QFY14E
Stock Performance During Quarter
Revenue growth tepid on account of moderate loan growth and high cost of
fund
We expect performance of Public Sector Banks (PSBs) to remain muted on the back
of slower pace of loan growth and deteriorating asset quality led by ongoing
restructure assets and stress in economy. We expect PSBs in our coverage universe
to report NII growth of 17.2% YoY led by moderate loan growth of 18% YoY by the
system and restructure assets which would likely to remain at elevated level as per
most of bank management. Provision for loan loss would be elevated level owing to
deteriorating asset quality and larger sum of restructure assets are in pipeline. Most
of PSBs are expected to reported higher slippage of restructure asset as per
management.
Muted loan growth reported by system
During quarter the banking system experience loan growth of 15% YoY as on 13th
Dec.2013 (as per RBI data) as against 18% YoY loan growth in 2QFY14. Second
quarter witnessed higher loan growth because of transfer of CD/CP borrowings to
loan but during this quarter revival of bond yield and lower demand of corporate loan
led slowdown in economy restricted moderate loan growth in the system. We expect
loan growth of 10-15% in our coverage universe. Bank of Baroda, Canara Bank,
Nifty Vs Bank Nifty during Quarter
UCO bank and Union bank are expected to reported loan growth of >15% while PNB
and SBIN would report <10% of loan growth.
Deposits growth lead by flow of FCNR deposits
Indian banks registered deposits growth of 17% YoY as on 13th Dec2014 according
to RBI data preliminary due to flow of FCRN deposits through RBI’s special
concession window to the tune of Rs. $14 bn. Union Bank is likely to get more
benefit from this route as per management. According to bank’s top official, bank
raised more FCNR deposits than repo borrowing. Bond yield during this quarter
soften to 7.5% as against 9.5% in second quarter and FCNR deposits are generally
low cost of deposits. This would lead the margin expansion of more than 1%. Margin
expansion would be seen in case of Union Bank. Cost of deposits of most of banks
is expected to remain same but we expect actual benefit would come from 4QFY14E
and onwards.
Loan (Rs tn) and YoY Gr(%)
Asset quality pressure likely to remain at elevated level
Asset quality pressure is likely to persist due to ongoing slowdown in economy, high
interest rate and continuous rising inflation. Gross slippages of banks are expected
to remain at elevated level and most of bankers are guided higher amount of
restructure assets in pipeline. We expect Andhra bank would hit more as their
impairment of asset would be more than 18% of asset means 100% of liability has to
service 82% of asset which would be tough itself for bank. We expect GNPA and net
NPA for PSBs would be in the range of 3.5%-4% and 2 to 2.5% respectively in
3QFY14.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
12

13. Public Sector Banks Result Preview 3QFY14E
Profitability likely to declined due to absence of core earnings, high operating
leverage and deteriorating asset quality
Profitability of PSBs are expected to declined by 19.5% in our coverage universe in
absence of core earnings, higher operating leverage due to wage revisions and high
provision against loan loss due to deteriorating asset quality. Union Bank, Canara Bank
and UCO Bank are expected to report healthy profit in our coverage because of healthy
loan growth and margin expansion. Although these banks would not be free from
impairment of asset and high operating leverage but would have comfortable profit due to
healthy core earnings as per our view.
Outlook
Most of PSBs are trading at lower range of valuation multiple owing to absence of core
earnings, operating leverage, deteriorating asset quality and higher amount of restructure
assets that are in pipeline. High inflation would be risk for the economy going forward.
Any rise in inflation would result of rise in interest rate by RBI in its third quarter monetary
policy review on 28th Jan.2014 which would be negative for banking industry. Most of
banking stocks are expected to report moderate revenue and profit growth owing to
multiple headwinds. In PSBs universe we like Canara Bank, UCO Bank, Union Bank.
ALBK
ALBK
Rs Cr
NII
PPP
Net Profit
3QFY14E
1169
750
182
2QFY14
1309
1154
276
3QFY13 % YoY Growth % QoQ Growth
1330
-12.1
-10.7
860
-12.7
-34.9
311
-41.4
-34.0
We expect bank to report profit growth of 4.2% YoY on the back of high operating
leverage and high provisions. Higher operating leverage is expected due to higher
employee provision and higher provisions on account of deteriorating asset quality as
bank witnessed sequentially increased of gross NPA.
Andhra Bank
ANDHRABANK
Rs Cr
3QFY14E
NII
1169
PPP
750
Net Profit
166
2QFY14
1045
643
71
3QFY13
971
712
257
% YoY Growth
20.4
5.4
-35.4
% QoQ Growth
11.9
16.7
135.0
We expect bank to report loan growth and deposits growth of 14% and 18% respectively.
Profit is expected to report negative growth on YoY basis largely due to high base and
expected muted performance during the quarter. Asset quality during quarter is expected
to report high deteriorating due to large chunk of restructure assets.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
13

14. Public Sector Banks Result Preview 3QFY14E
Bank of Baroda
BANKBARODA
Rs Cr
3QFY14E
NII
3515
PPP
2539
Net Profit
1067
2QFY14
2895
2125
1168
3QFY13
2841
2256
1012
% YoY Growth
23.7
12.6
5.5
% QoQ Growth
21.4
19.5
-8.7
We expect profit growth of 5.5% YoY largely due to tax rate of 30% versus 6.3% in
2QFY14 and 17.5% YoY in 1QFY14. As per our expectation NII would be grew by 24%
largely due loan growth of 20% YoY. Asset quality of bank is expected to remain high as
management guided restructure pipeline is Rs.20bn.
Bank of India
BANKINDIA
Rs Cr
NII
PPP
Net Profit
3QFY14E
2683
2218
602
2QFY14
2527
2102
622
3QFY13 % YoY Growth % QoQ Growth
2308
16.2
6.2
1856
19.5
5.5
803
-25.1
-3.3
We expect loan and deposits growth of 23% and 29% YoY respectively. Profit is lower by
25% YoY largely due to higher provisions. Bank is expected to report higher slippage as
management guided restructure pipeline of Rs.10-15 bn. NIM is expected to improve by
20 bps YoY due to international NIM.
Canara Bank
CANBK
Rs Cr
NII
PPP
Net Profit
3QFY14E
2606
1734
775
2QFY14
2191
1425
626
3QFY13 % YoY Growth
1988
31.1
1516
14.4
714
8.5
% QoQ Growth
18.9
21.7
23.8
Canara Bank is expected to report 30%+loan growth largely due to lower base. We
expect loan to grow by 34% YoY and flat deposits growth. Asset quality of bank is
expected to improve on sequential basis largely due to expected lower slippage. AT PBT
level , we expect bank to grow by 12.5% but we assume tax rate of 25% versus 16% in
2QFY14 and 19% in 1QFY14 which lead profit growth of 8.5% YoY. Gross slippage and
tax rate will be monitor able.
Punjab National Bank
PNB
Rs Cr
NII
PPP
Net Profit
3QFY14E
4201
2874
607
2QFY14
4016
2535
505
3QFY13
3733
2682
1306
% YoY Growth
12.5
7.2
-53.5
% QoQ Growth
4.6
13.4
20.2
PNB is expected to report loan growth of less than 10% as bank is more focus on
consolidating its balance sheet than growth. Asset quality is expected to remain at
elevated level as bank’s slippage not concentrated in particular industry. NIM is expected
to report in the range of 3.5-3.7%. Profit is expected to be dented on account of higher
provisions.
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
14

15. Public Sector Banks Result Preview 3QFY14E
State Bank of India
SBIN
Rs Cr
3QFY14E
NII
12959
PPP
6734
Net Profit
2535
2QFY14
12251
6312
2375
3QFY13
11154
7791
3396
% YoY Growth
16.2
-13.6
-25.4
% QoQ Growth
5.8
6.7
6.7
We expect SBIN loan and deposits growth of 17% and 16% YoY respectively. NIN is
expected to report in the range of 3.5-4% as bank has increased base rate during the
quarter. Operating leverage and asset quality is expected to dent profit by 25% YoY. We
remain have concern about bank’s deteriorating asset quality and continuous fall of PCR.
Gross slippage and provisions make by bank is key monitor able as per our view.
UCO Bank
UCOBANK
Rs Cr
3QFY14E
2QFY14
3QFY13 % YoY Growth % QoQ Growth
NII
1642
1569
1177
39.5
4.7
PPP
1285
1166
831
54.6
10.2
Net Profit
338
400
102
231.4
-15.5
UCO bank is expected to report profit growth of 200%+ largely due to robust expected NII
growth which is lead by low of fund. UCO Bank’s CASA grew exponential in past few
quarter but after sanction of western countries in Iran, low cost deposits are likely to be
stagnant. But bank is expected to get benefit of same in FY14. Key monitor able would
be CASA trend and asset quality.
Union Bank
UNIONBANK
Rs Cr
NII
PPP
Net Profit
3QFY14E
2015
1484
400
2QFY14
1954
1225
208
3QFY13
1891
1358
302
% YoY Growth
6.6
9.3
32.5
% QoQ Growth
3.1
21.1
92.3
We expect Union bank’s profit to grow by 32% YoY largely due to margin expansion and
flow of FCNR deposits. Cost of fund is likely to soften this quarter as bank borrowed
more money on repo and less MSF. Bond yield settled at 8.75% during quarter as
against 9.5% in previous quarter. We expect loan and deposits growth of 17% and 18%
YoY. Asset quality is likely to persist. Improvement in CASA and margin expansion would
be key monitor able.
Result Preview ; at a glance
PSU BANKS
ALBK
ANDHRABANK
BANKBARODA
BANKINDIA
CANBK
DENABANK
IOB
ORIENTBANK
PNB
SBIN
SYNDIBANK
UCOBANK
UNIONBANK
VIJAYABANK
Total
NII
1382
1169
3515
2683
2606
684
1467
1395
4201
12959
1480
1642
2015
660
36476
3QFY14E
PPP Net Profit
1139
324
750
182
2539
1067
2218
602
1734
775
458
107.4
972
120
965
269
2874
607
6734
2535
847
319
1285
338
1484
400
385
127
23245
7448
NII
1309
1045
2895
2527
2191
107
1452
1281
4016
12251
1411
1569
1954
705
33404
2QFY14
PPP Net Profit
1154
276
643
71
2125
1168
2102
622
1425
626
369
625
791
133
825
251
2535
505
6312
2375
811
470
1166
400
1225
208
273
136
20601
7590
NII
1330
971
2841
2308
1988
615
1382
1204
3733
11154
1400
1177
1891
456
31120
3QFY13
PPP Net Profit
860
311
712
257
2256
1012
1856
803
1516
714
443
206
1017
116
926
326
2682
1306
7791
3396
864
508
831
102
1358
302
261
127
22513
9175
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
NII
3.9
20.4
23.7
16.2
31.1
11.2
6.2
15.9
12.5
16.2
5.7
39.5
6.6
44.7
17.2
YoY Growth
PPP Net Profit
32.4
4.2
5.4
-29.2
12.6
5.5
19.5
-25.1
14.4
8.5
3.4
-47.9
-4.4
3.4
4.2
-17.5
7.2
-53.5
-13.6
-25.4
-2.0
-37.2
54.6
231.4
9.3
32.5
47.5
0.0
3.3
-18.8
QoQ Growth
NII
PPP Net Profit
5.6
-1.3
17.5
11.9
16.7
157.6
21.4
19.5
-8.7
6.2
5.5
-3.3
18.9
21.7
23.8
539.3
24.1
-82.8
1.0
22.9
-9.8
8.9
17.0
7.2
4.6
13.4
20.2
5.8
6.7
6.7
4.9
4.4
-32.1
4.7
10.2
-15.5
3.1
21.1
92.3
-6.4
41.0
-6.6
9.2
12.8
-1.9
15

16. HDFC LTD
Result Updated
CMP
Target Price
Previous Target Price
Upside
Change from Previous
NEUTRAL
840.5
875
4
-
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Cr)
Average Daily Volume
Nifty
500010
HDFC
931/632
131340
1.16
6338
Stock Performance
1M
Absolute
6.6
Rel.to Nifty
5.7
1yr
2.4
-2.1
YTD
2.4
-2.1
Share Holding Pattern-%
Current 4QFY13 3QFY1
Promoters - 3
FII
74.3
73.1
73.6
DII
12.9
13.8
13.0
Others
12.9
13.1
13.3
"NEUTRAL "
23th Jan, 2014
HDFC's profit growth of 12.1% YoY was inline with street expectation. NBFC
reported stable asset quality on sequential basis as well as registered healthy
loan growth. HDFC ltd has well above CAR against requirement which would
support growth going forward. At the current price of Rs.840, stock is trading
at 4.3 tines one year forward book and 26 times of FY14E’s earnings. We value
HDFC at Rs.875/ share which is 4.5 times of FY14E’s book and P/E multiple of
27 times of full year EPS.
Profit growth in line with street expectation
HDFC Ltd’s 3QFY14 result was in line with street expectation as profit grew by 12%
YoY to Rs.1278 cr on standalone basis. Profit of the NBFC grew by 13.4% YoY on
consolidated basis to Rs.1935 cr versus Rs.1706 cr in last quarter. NII grew by
12.8% YoY to Rs.1940 with inclusion of investment sale. Adjusted the same, NII
grew by 17% YoY to Rs.1905 cr versus Rs.1624 cr last quarter corresponding year.
Stable operating cost led operating growth at 12.5% YoY
Other income was Rs.46 cr versus Rs.105 cr in last quarter and Rs.95 cr in previous
quarter. Due to lower support from other income, total revenue grew by 13% YoY to
Rs.1951 cr. Operating expenses increased to Rs.168 cr ( Up by 17% YoY) led
operating profit growth of 12.5% YoY to Rs.1783 cr.
Stable asset quality and balance sheet keep growing
On asset quality side, NBFC’s gross non performing asset stood at 0.77% of loan of
loan portfolio versus 0.79% in previous quarter and in absolute term in amounted to
Rs.1478 cr. Loan book of the company corpus increased by 19.2% YoY to
Rs.192266 cr as on December 2013. The total assets increased to Rs 218286 cr as
HDFC Vs Nifty
against Rs 183770 cr as at December, 2012 registering an increase of 19 per cent.
Margin compression, spread would declined going forward
Net interest margin for the quarter stood at 4% despite of 25 bps reduced home loan
for retail customers during the quarter as against 4.06% in 2QFY14. Spread which is
the difference of interest income and interest expenses, maintained at 2.25%. Going
forward, there would be some pressure in spread as NBFC’s balance sheet keeps
increasing with the support of borrow fund. In rising interest rate and inflationary
pressure era, we expect to come down to 2% in next couple of quarters.
Financials
NII
Total Income
PPP
Net Profit
EPS
2011
4483
5558
3890
3535
24.1
Narnolia Securities Ltd,
2012
5212
6198
5746
4123
27.9
Rs, Cr
2013
2014E
2015E
6179
7053
8193
7257
8131
9271
6718
7562
8530
4848
5438
6194
31.4
35.2
40.1
(Source: Company/Eastwind)
16

17. HDFC LTD
Quarterly Result
NII grew on the back of healthy loan growth
and stable spread
Operating cost stable led PPP growth at 12.5%
YoY
Net profit of Rs.1278 cr was in line with
expectation.
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
17

18. HDFC LTD
HDFC Performance vs Nifty with base re-adjustment
Quarterly Performance
Rs Cr
Income from Operations
Profit on Sale of Investments
Total Income
Interest and Other Charges
Staff Expenses
Provision for Contingencies
Other Expenses
Depreciation
Total Expenditure
Profit from Operations before Other Income
Other Income
Profit Before Tax
Tax Expense
Net Profit After Tax
3QFY14 2QFY14 3QFY13 % YoY Gr % QoQ Gr
5985
5859
5146
16.3
2.2
35
87
96
-64.1
-60.1
6020
5946
5242
14.8
1.2
4080
4046
3521
15.9
0.8
71
67
64
10.3
5.4
25
15
40
-37.5
66.7
89
95
74
21.1
-6.3
8
9
6
41.8
-12.0
4273
4233
3705
15.3
1.0
1747
1713
1537
13.7
1.9
11
8
8
32.8
38.4
1758
1721
1545
13.8
2.1
480
455
405
18.5
5.5
1278
1266
1140
12.1
0.9
Source: Eastwind/Company
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
18

19. Zensar Tech
"BUY"
23rd Jan' 14
"Better growth trajectory ahead"
Result update
Buy
CMP
Target Price
Previous Target Price
Upside
Change from Previous
386
440
400
14%
10%
Market Data
BSE Code
NSE Symbol
52wk Range H/L
Mkt Capital (Rs Crores)
Average Daily Volume
Nifty
504067
ZENSARTECH
430/181
1691
20884
6339
Stock Performance
1M
13
12
Absolute
Rel. to Nifty
1yr
32.6
28.4
YTD
16.5
12.8
Share Holding Pattern-%
Current
Promoters
FII
DII
Others
1QFY14
48.27
11.99
0.96
38.78
48.35
11.68
1.26
38.71
1 year forward P/E
4QFY13
48.36
10.75
1.28
39.61
Earning numbers below expectation, management confident for growth ahead:
For 3QFY14, Zensar Tech reported lower growth than expectations, Sales declined by
1%(QoQ) because of seasonal and furloughs impacts. PAT was down by 28%(QoQ),
the profit growth has been impacted due to currency fluctuations during the period to
the extent of Rs 19.06 Cr on a YoY basis and Rs 23.02 Cr on a QoQ basis.
Management expects good growth starting from 4QFY14E with its Infrastructure
Management (IM) business gaining momentum. The deal booking and pipeline is good
and expects to perform well going forward. It expects double-digit growth in the
Enterprise Services business for the FY15 on the back of healthy pipeline. In addition, it
anticipates good growth from the IMS for the FY'15.
On Margin front; During the Quarter, its EBITDA margin declined by 240bps to
14.7%and PAT margin down by 320bps to 8.6%. Post earning, management has
expressed its margin at a range of 16-17% and PAT margin could be seen at a double
figure for only organic business.
On segmental growth; The Infrastructure Management(IM) business of the company,
which has been restructured over the last few quarters, has shown a sharp increase in
dollar revenues of over 12% on a sequential quarter basis. The company reported 12
new customer wins in the quarter including over USD27 mn of new business in IM. In
INR term, Application Management Services (contributes 65% of Sales) declined by
4.5%(QoQ) and IM grew by 0.5% (QoQ). While, Products and License business jumped
from Rs50cr (2QFY14) to 70cr.
Mix geographical footing: During the quarter, revenue growth from Europe region was
impressive with 10%(QoQ), while USA and ROW, both were down by 1% impacted by
seasonal impact.Given the order book Enterprise, business expects to grow robustly
going forward.
Healthy order Pipeline: The Quarter has been upbeat with several new client additions,
with the company’s focus on cloud, security and multi-vendor services reaping results.
Recent Management comments also revealed favourable scenario of order booking.
View and Valuation: The deal booking and pipeline is good and expects to perform well
going forward. It expects double digit growth in the Enterprise Services business for the
FY15E on the back of healthy pipeline. Also, it anticipates good growth from the IMS for
the FY'15E.
Order pipeline continues to be stable at $ 200 mn mainly on the back of good demand
seen in Mobility, Cloud Computing and social networking side. Considering healthy
order pipeline and its earning visibility in near future, we maintain “BUY” view on the
stock with a target price of Rs 440. At a CMP of Rs 386, stock trades at 5.6x FY15E EPS.
Financials
Revenue
EBITDA
PAT
EBITDA Margin
PAT Margin
3QFY14
592.01
87.26
50.8
14.7%
8.6%
2QFY14
599.7
102.54
70.6
17.1%
11.8%
(QoQ)-%
(1.3)
(14.9)
(28.0)
(240bps)
(320bps)
3QFY13
525.5
70.1
48.7
13.3%
9.3%
Rs, Crore
(YoY)-%
12.7
24.5
4.3
140bps
(70bps)
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
19

20. Zensar Tech
Sales and Sales Growth-%
(Source: Company/Eastwind)
Margin-%
(Source: Company/Eastwind)
Sales and Sales Growth-%
Revenue Mix-Geographies
USA
Europe
Africa
Row
1QFY13
72%
9%
8%
11%
2QFY13
71%
9%
9%
11%
3QFY13
72%
9%
9%
10%
4QFY13
74%
9%
9%
8%
1QFY14
76%
8%
9%
7%
2QFY14
75%
9%
10%
6%
3QFY142
75%
10%
9%
6%
64%
21%
15%
66%
22%
12%
68%
21%
11%
64%
24%
12%
65%
23%
12%
68%
23%
9%
65%
23%
12%
33%
35%
17%
15%
30%
31%
34%
40%
40%
36%
(Source: Company/Eastwind)
18%
17%
18%
12%
12%
12%
37%
33%
18%
12%
37%
36%
18%
9%
35%
36%
17%
12%
52%
20%
7%
21%
53%
21%
11%
15%
61%
20%
2%
15%
63%
20%
2%
17%
61%
21%
2%
16%
Revenue Mix-Service Type
Application Management Services
Infrastructure Magt Services
Products and License
Revenue Mix-Project Type
Fixed Price
Time & Materials
Support Services
Product Sales
Revenue Mix-Vertical
Manufacturing , Retail & Distribution
Insurance, Banking & Finance
Govt , healthcare & Utilities *
Alliance & Others
54%
20%
11%
15%
54%
19%
10%
17%
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
20

21. Zensar Tech
Clients/Headcounts Metrics;
Revenue Mix-Geographies
1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY142
47
6
1
1
43
7
2
1
41
7
2
1
40
8
2
1
49
6
1
1
47
6
1
1
49
6
2
1
35%
40%
69
35%
42%
59
35%
42%
56
35%
43%
55
37%
43%
66
39%
46%
61
36%
43%
59
69%
31%
81%
7286
72%
28%
82%
6825
70%
30%
83%
6504
69%
31%
82%
6508
68%
32%
81%
6519
67%
33%
80%
6657
69%
31%
79%
6741
Number of million dollar
$1mn+
$5mn+
$10mn+
$20mn+
Client Contribution to Business
top 5 clients
top 10 clients
DSO
Effort & Utilization
Onsite
Offshore
Utilization (Including Trainees)
Headcount
Financials;
Rs, Cr
Net Sales
Other Operating Income
Total income from operations (net)
Purchases of stock-in-trade
Employee Cost
Other expenses
Total Expenses
EBITDA
Depreciation
Other Income
Extra Ordinery Items
EBIT
Interest Cost
PBT
Tax
PAT
Growth-%
Sales
EBITDA
PAT
Margin -%
EBITDA
EBIT
PAT
Expenses on Sales-%
Employee Cost
Other expenses
Tax rate
Valuation
CMP
No of Share
NW
EPS
BVPS
RoE-%
Dividen Payout ratio
P/BV
P/E
FY10
497.08
0.00
497.08
0.00
393.17
0.00
393.17
103.91
24.92
8.15
0.00
78.99
0.55
86.59
2.43
84.16
FY11
562.56
15.03
577.59
0.00
343.12
135.71
478.83
98.76
25.88
14.20
0.00
72.88
0.85
86.23
-2.24
88.47
FY12
700.15
12.57
712.72
0.00
411.36
165.98
577.34
135.38
25.05
27.91
0.00
110.33
1.03
137.21
42.67
94.54
FY13
2114.52
13.95
2128.47
236.86
1177.83
418.73
1833.42
295.05
33.16
8.66
0.00
261.89
9.95
260.60
86.07
174.53
FY14E
2330.91
18.65
2349.56
223.21
1268.76
505.16
1997.13
352.43
39.67
46.99
0.00
312.76
10.81
348.94
118.64
230.30
FY15E
3014.78
24.12
3038.90
303.89
1641.01
653.36
2598.26
440.64
51.31
75.97
0.00
389.33
8.65
456.65
155.26
301.39
17.8%
28.7%
38.9%
13.2%
-5.0%
5.1%
24.5%
37.1%
6.9%
202.0%
117.9%
84.6%
10.2%
19.4%
32.0%
29.3%
25.0%
30.9%
20.9%
15.9%
16.9%
17.6%
13.0%
15.7%
19.3%
15.8%
13.5%
14.0%
12.4%
8.3%
15.1%
13.4%
9.9%
14.6%
12.9%
10.0%
79.1%
0.0%
2.8%
59.4%
23.5%
-2.6%
57.7%
23.3%
31.1%
55.3%
19.7%
33.0%
54.4%
9.6%
34.0%
54.4%
10.1%
34.0%
272.10
2.16
293.93
38.96
136.08
28.6%
16.4%
2.00
6.98
157.85
4.34
366.96
20.38
84.55
24.1%
19.9%
1.87
7.74
180.00
4.34
417.42
21.78
96.18
22.6%
37.3%
1.87
8.26
248.58
4.36
751.69
40.03
172.41
23.2%
21.9%
1.44
6.21
386.00
386.00
4.37
4.37
938.54
1193.91
52.70
68.97
214.77
273.21
24.5%
25.2%
18.9%
15.3%
1.80
1.41
7.32
5.60
(Source: Company/Eastwind)
Narnolia Securities Ltd,
Please refer to the Disclaimers at the end of this Report.
21

22. N arnolia Securities Ltd
402, 4th floor 7/ 1, Lord s Sinha Road Kolkata 700071, Ph
033-32011233 Toll Free no : 1-800-345-4000
em ail: research@narnolia.com ,
w ebsite : w w w .narnolia.com
Risk Disclosure & Disclaimer: This report/message is for the personal information of
the authorized recipient and does not construe to be any investment, legal or taxation
advice to you. Narnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting any
action based upon it. This report/message is not for public distribution and has been
furnished to you solely for your information and should not be reproduced or
redistributed to any other person in any from. The report/message is based upon publicly
available information, findings of our research wing “East wind” & information that we
consider reliable, but we do not represent that it is accurate or complete and we do not
provide any express or implied warranty of any kind, and also these are subject to change
without notice. The recipients of this report should rely on their own investigations,
should use their own judgment for taking any investment decisions keeping in mind that
past performance is not necessarily a guide to future performance & that the the value of
any investment or income are subject to market and other risks. Further it will be safe to
assume that NSL and /or its Group or associate Companies, their Directors, affiliates
and/or employees may have interests/ positions, financial or otherwise, individually or
otherwise in the recommended/mentioned securities/mutual funds/ model funds and
other investment products which may be added or disposed including & other mentioned
in this report/message.